Kempower wants to use electricity storage as part of transport charging solutions

Translation: Original comment published in Finnish on 2/23/2024 at 8:36 am EET.

The company entered into a partnership with Polarium, a major Swedish energy storage developer. We expect the use of electric storage systems, at least initially, to focus purely on bypassing grid bottlenecks and accelerating the installation of rapid transport charging infrastructure.

Electricity storage can be used to fill gaps in the grid

Kempower announced in a press release on Thursday that it has entered into a partnership with Swedish electricity storage company Polarium (2022 revenue ~200 MEUR). By combining electricity storage with transport charging solutions, it is possible to achieve charging capacities that momentarily exceed the capacity of the local electricity connection. Kempower's press release states that the current constraints of the electricity grid pose significant challenges to the installation of efficient charging solutions, for which Polarium storage systems are the solution. The cooperation aims to improve charging capacity for larger vehicles in particular. Kempower also mentioned in the Q4 report that grid constraints are currently one of the factors slowing demand, which the company expects to ease fairly soon. We therefore estimate that the announced collaboration could support Kempower's earnings from H2’2024 onwards.

In principle, battery systems could also generate ancillary revenues

The installation of electricity storage systems at charging stations raises the question of whether the systems could be used for other productive purposes, such as balancing the electricity grid, for example by participating in the balancing market when storage utilization is otherwise known to be low. We expect the acquisition of such additional revenue streams to be outside Kempower's core focus for the time being, as the main focus is likely to be on resolving charging bottlenecks and meeting customers' charging needs. The relatively small size of the electricity storage units likely to be installed at the charging stations also limits the revenue potential relative to the effort and additional costs (e.g. connection charges) required for more diversified use of electricity storage. In the long term, new productive uses can certainly be developed, especially if the use of electricity storage becomes widespread. However, in the long term, the electricity grid will also be strengthened, which may help to limit the need for storage solutions for charging stations.